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Investment X offers to pay you $4,200 per year for eight years, whereas Investment Y offers...

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Finance

Investment X offers to pay you $4,200 per year for eight years,whereas Investment Y offers to pay you $6,100 per year for fiveyears. Which of these cash flow streams has the higher presentvalue if the discount rate is 5 percent? If the discount rate is 15percent?

Answer & Explanation Solved by verified expert
4.4 Ratings (830 Votes)
Investment X Net present value is solved using a financial calculator The steps to solve on the financial calculator Press the CF button CF0 0 Cash flow for all the years should be entered Press Enter and down arrow after inputting each cash flow After entering the last cash flow press the NPV button and enter the discount rate of 5 Press the down arrow and CPT buttons to get the net present value Net Present    See Answer
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Transcribed Image Text

Investment X offers to pay you $4,200 per year for eight years,whereas Investment Y offers to pay you $6,100 per year for fiveyears. Which of these cash flow streams has the higher presentvalue if the discount rate is 5 percent? If the discount rate is 15percent?

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